Orange County IDA » The Newburgh Advocate

Pulling the Plug on the NLDC

Two years after former IDA Director Ed Lynch asked the Authorities Budget Office for more time to consider what to do about the delinquent Newburgh Local Development Corporation, it looks like the city has finally come to the conclusion to pull the plug.

A recent FOIL request to the ABO revealed that the city’s Industrial Development Agency and City Manager Richard Herbek had been given a warning by the ABO about the delinquency of the Local Development Corporation. The LDC has been getting warnings since at least 2011, when I wrote about them here and here.

From one of those earlier posts, dated June 13, 2011, I wrote:

Newburgh Industrial Development Agency chair Joshua Smith said the old NLDC bylaws describe the board “as the city council and the IDA. We have at least twice asked the council to join us in a meeting. I plan to raise the issue again at our next meeting.” That meeting will be June 20, at 7 p.m. in City Hall. [Emphasis added]

Following up on that, in a post from October 10, 2011, I wrote:

During that [June 20, 2011] meeting, the minutes state that “Mr. Whyatt proposes convening a special LDC meeting at which the IDA members can vote as a majority on any actions it deems necessary, such as obtaining banking records, determining assets, etc.”

However, it is not apparent that any action has been taken. NLDC last appeared as an agenda item at the July meeting, but the chairman preempted discussion by saying there was nothing to discuss, and moved on to the next agenda item. It has not reappeared since.

Teri Waivada, the IDA’s current executive director, shrugged off responsibility for the NLDC, stating that it has never met with the IDA’s current board members, although she believes the corporation is still active (which does not make any sense to me, unless by “active” she means it has not yet been officially dissolved):

For his part, City Manager Herbek writes that the city will be reviewing how to disband the NLDC:

Final Thoughts

Is there any reason to keep the NLDC? As I have written previously, local development corporations can do things that industrial development agencies can’t, such as provide funding for nonprofits. At the county level, our Orange Count Industrial Development Agency board asked the county legislature a few years ago to create the Orange County Funding Corporation, a local development corporation, for just this purpose. When Mount Saint Mary College was looking for bonding money to help pay for a construction project, they went to the OCFC, and were successful in getting bonds.

The Mount did not go to the Newburgh Local Development Corporation, if they even knew it existed. Should they have? Would it be a good idea for Newburgh to have its own funding entity for nonprofits and small businesses?

As someone who has sat through countless Newburgh IDA meetings, and a good many Orange County IDA meetings, as well as countless Newburgh City Council meetings, in my opinion it is just not worth it.

Officially the NLDC board is made up of the city council plus the IDA board. The IDA has toyed with the concept of doing something about the LDC, but they have a difficult enough time carrying on regular business as it is. In contrast, the county IDA (who make up the board of the OCFC as well) has a board that is a well-oiled machine, and includes financial professionals.

The Newburgh IDA cannot compete with them in terms of resources.

In this case, to get the NLDC operational again would demand meetings of the existing gigantic board of twelve members to come to a consensus about what to do, even if that is to appoint a new board and/or alter the NLDC bylaws. This idea seems preposterous, especially since the board has never met in the two or more years it has been officially listed as delinquent with the state.

To have one LDC to cover Orange County (I do not know of other LDCs in cities or villages of the county, although their existence would not surprise me) is perfectly reasonable.

The only potential thorn I foresee is that the NLDC board must meet to approve dissolution. Despite requests by the ABO for over two years, the city has dragged its feet. I wish City Manager Herbek luck in herding the cats.

All that glitters is not Golden

All that glisters is not gold… Had you been as wise as bold, Young in limbs, in judgement old, Your answer had not been inscroll’d, Fare you well, your suit is cold.–William Shakespeare, The Merchant of Venice

In addition to whatever other accolades attorney Richard Golden can claim, such as former Orange County Attorney, he is proving himself a master as the Government Defiance Man. When the Orange County Industrial Development Agency was having some trouble with the fact that their Armory Grant was, oh, illegal, but they would never admit that or ask the State Comptroller’s office about it because the totally obvious answer was yes, this is totally wrong, they called in Government Defiance Man Rick Golden to figure out a way to let them do what they want–legal or not.

Government Defiance Man wisely knew not to ask the State Comptroller’s opinion, either, but came up with some reasoning that the Authorities Budget Office (part of the State Comptroller’s Division) shot down, albeit to a journalist and not directly to the IDA.

Repeatedly, I asked the Orange County IDA, including former Chairman Jim Petro and former Counsel Phil Crotty, as well as grantmaker Bill Kaplan, why they woudn’t just make a phone call and ask the Comptroller’s Office what they thought about the legality of this grant, but I never got an answer. I must not have been the only one with an eighth grade or better reading level who could understand the grant was illegal.

Now Rick Golden is defending County Executive Diana’s administration in the Valley View Nursing Home hearings. What does this involve? Yes–of course–more government defiance.

In a letter from Mr. Golden to the attorney advising the legislative committee, Mr. Golden explains his objections to giving testimony under oath, including this:

Those called to give sworn testimony will then have the specter of being the subject of a criminal prosecution for statements which turn out to be inaccurate but which flow from simple lapses in memory or hindsight attribution of constructive knowledge of certain documents, etc. This concern by County employees is particularly acute in the light of the political construct of the formation of the Committees. Although such prosecutions will likely not prevail, those County employees branded by Committee members with a simple accusation of perjury will bear that scar forever, and will be subject to the potentially crippling expense of a criminal prosecution against them, as the County cannot defend or indemnify them on matters arising out of any criminal charges.

However, Mr. Golden’s grip on perjury is slippery at best:

N.Y. PEN. LAW § 210.05 : NY Code – Section 210.05: Perjury in the third degree

A  person  is  guilty  of  perjury  in the third degree when he swears
  falsely.
    Perjury in the third degree is a class A misdemeanor.

N.Y. PEN. LAW § 210.10 : NY Code – Section 210.10: Perjury in the second degree

A  person  is  guilty  of  perjury in the second degree when he swears
  falsely and when his false statement is (a) made in a subscribed written
  instrument for which an oath is required  by  law,  and  (b)  made  with
  intent  to  mislead  a public servant in the performance of his official
  functions,  and  (c)  material  to  the  action,  proceeding  or  matter
  involved.
    Perjury in the second degree is a class E felony.

N.Y. PEN. LAW § 210.15 : NY Code – Section 210.15: Perjury in the first degree

A  person  is  guilty  of  perjury  in the first degree when he swears
  falsely and when his false statement (a) consists of testimony, and  (b)
  is material to the action, proceeding or matter in which it is made.
    Perjury in the first degree is a class D felony.

What does it mean to “swear falsely”? It does NOT mean, to use Mr. Golden’s terms, to make “simple lapses in memory or hindsight…” N.Y. PEN. LAW § 210.00 : NY Code – Section 210.00: Perjury and related offenses; definitions of terms, Paragraph 5 defines “swear falsely” thus:

  5. "Swear falsely." A person "swears falsely"  when  he  intentionally
  makes  a  false statement which he does not believe to be true (a) while
  giving testimony, or (b) under oath in a subscribed written  instrument.
  A  false swearing in a subscribed written instrument shall not be deemed
  complete until the instrument is delivered  by  its  subscriber,  or  by
  someone  acting  in his behalf, to another person with intent that it be
  uttered or published as true.

Thus, perjury is knowingly lying. Why would our dear County Executive fear being caught knowingly lying, or having any of his employees caught knowingly lying?

The drama continues this week with hearings scheduled for Tuesday, Wednesday and Friday (monthly schedule here). Diana might be there Tuesday; if and probably not, we will have Golden’s magic act and slippery grip of perjury in his place.

One for the Ladies

Did you read Doonesbury today, Sunday July 15? Here’s a link to the strip.

When I read this, I immediately thought of the Newburgh Industrial Development Agency, which the Newburgh City Council had the “wisdom” to appoint an all-male, seven-member board in 2008. At some point, one of its members effectively dropped out, moving out of state, but it took a long time for the board to bother noticing that this was a problem that needed attention.

They are now looking for another board member–although the search process has been limper than overcooked noodles.

Perhaps there is a lady out there who could take on the dubious challenge of improving the collective IQ level and non-existent gender equity of this agency.

My second thought was about the Orange County IDA, which is one small point better than the Newburgh IDA on the gender equity score because IT has a WOMAN BOARD MEMBER! Imagine! How extraordinary. And unlike several of the Newburgh IDA board members, whose backgrounds are academic and/or nonprofit, Ms. Rogulski is a businesswoman–a banker–and she frequently says very intelligent things! I have heard them with my own ears!

But this does not raise the collective IQ of the County IDA anywhere close to where it should be, although it brings them perhaps to the early 1960s instead of the 1950s or the 1900s.

It must have been Ms. Rogulski’s sparkling intelligence that swayed Active Ventilation to pursuing the County IDA for benefits and giving up on the Newburgh IDA, even though they are located in the City of Newburgh. Not for long. Wawayanda beckons.

Instead, the Newburgh IDA has a proposal before the Newburgh City Council (that may be on the agenda for Monday night’s meeting) for a busywork project of making a database of small businesses–for which they are asking for a CDBG grant for $15,000. It is unclear to me now, as it was in February, when this proposal was first brought forward, several things:

a.) Isn’t this the kind of thing the IDA should be doing on its own dime?
b.) Aren’t the CDBG funds better spent elsewhere?
c.) Isn’t it totally pathetic the Newburgh IDA can’t do real work, like keeping Active Ventilation in Newburgh with its 30 or more jobs to be created, in manufacturing no less–how many US manufacturing companies are there these days–and instead we get these ridiculous projects a competent secretary could polish off in a few afternoons?

Memo to the Newburgh IDA: Women Board Members Needed. It’s Critical.

P.S. I admit, I also wondered fancifully if Mr. Petro had resigned to open up another spot for a woman, instead of some other reason, like holding the State Comptroller’s Office in contempt, but there is no record of any correspondence between the State Comptroller and Mr. Petro or his friend and fellow resignee IDA counsel Phil Crotty. How do I know? I FOILed for it. Although I guess you can’t FOIL telephone calls.

No slaughter for Armory sacred cows

On December 6, The Newburgh Advocate received several documents in response to a Freedom of Information Law Request made to the New York State Authorities Budget Office regarding the Orange County Industrial Development Agency’s $500,000 grant to the Newburgh Armory Unity Center. Despite the fact that the transaction is illegal in multiple ways, all the players involved continue to look the other way and there has been no regulatory action apart from a limp report issued by the ABO.

It was back on June 24 that I first asked about the propriety of the proposed OC IDA grant in this post, “Can Orange County IDA give Armory $500,000?” In that post, I wrote that there are two main barriers to such a grant, according to the ABO, in that there is no statutory authority for IDAs to do this and that there is a “civic facilities prohibition” that has been in effect since 2008 and specifically prohibits the provision of financial aid to nonprofit civic facilities such as the Armory.

On July 18, I posted this Open letter to the Orange County IDA, I reiterated these two issues, in addition to a statement from the State Comptroller’s Office that “IDAs cannot give gifts/grants of their own monies.” I also asked the OC IDA to get an opinion from the State Comptroller on whether the grant is legal.

On July 25, 2011, the post Orange County IDA justifies grant covered the OC IDA meeting of July 20th at which the Chairman Jim Petro presented the board’s justification for the grant, quoting a section of N.Y. GMU. LAW § 852:

It is hereby further declared to be the policy of this state to protect and promote the health of the inhabitants of this state and to increase trade through promoting the development of facilities to provide recreation for the citizens of the state and to attract tourists from other states. The use of all such rights and powers is a public purpose essential to the public interest and for which public funds may be expended.

However, when asked to respond, the ABO clarified that the passage above is modified by §854, which limits the types of financial assistance industrial development agencies can give. (For the full explanation, see the post.)

At their August 17 meeting, the Orange County IDA made some technical changes to the grant, now calling it a “project expenditure” instead of a grant, and while the original plan for the grant had been to give the funds to the Armory to cover such expenses as personnel or other “soft costs” (since philanthropist Bill Kaplan’s foundation would be paying for the “hard costs” of construction, renovation, etc.) that aspect of the grant had changed, too. Now the grant would only be covering “hard costs” such as “construction, reconstruction, and improvements of the Newburgh Armory Building, or to furnish, equip, and maintain the building.”

Additionally, the structuring of how the money is given to the Armory changed–instead of giving the money directly to the Armory nonprofit (as originally planned) the IDA would reimburse receipts from vendors up to the yearly allotted amount of $100,000 for five years.

It is not clear how these superficial alterations, though, except the IDA from the civic facilities prohibition, for example, or any of the other ways in which this grant is not legal (no statutory authority, can’t give grants of its own money, etc.) Another lesser question I raised in the post on the August 17 meeting was whether there should have been a public hearing, since the law indicates that IDA projects of financial assistance in excess of $100,000 must have one.

What’s happened since then

On October 17, 2011, the ABO issued a Special Report on Industrial Development Agency Grant Awards to Private Entities. In it, the ABO examines grant awards given by 29 IDAs, including the Orange County IDA. While the report gives a good introduction to some of the relevant legal issues, it falls short in making definitive statements about whether or not these expenditures are legal, instead hedging statements with modifiers such as here: “Such awards would appear to be inconsistent with the ABO’s reading of General Municipal Law” (emphasis added.)

Also, at the conclusion of the report, the ABO closes with a milquetoast recommendation that the IDAs might possibly want to think about, if nothing else is going on:

The ABO does not question the intentions or motives of boards of directors in making these funding decisions. The purpose of this report is to raise, as an issue, how IDAs direct their money to community projects and private entities. As a result of this report, the ABO suggests that IDA boards undertake a thorough review of their organizations’ enabling legislation, missions, and financial assistance policies to make sure that all activities in which they are engaged are statutorily appropriate and mission-driven.

This is disappointing, to say the least. The mission of the ABO is, among other things, “[i]nvestigating complaints made against public authorities for non-compliance or inappropriate conduct,” and their powers and duties, among other things, are

Enforcing compliance with statutory requirements, including publicly warning and censuring authorities for non-compliance and recommending the dismissal of officers and directors.
Investigating and acting on complaints concerning the failure of a public authority to comply with State law.
Issuing reports of its activities, findings, analysis and recommendations.

Why would the ABO shy away from making a definitive legal statement, recommendation, or regulatory action of enforcing state law, which is one of its powers and duties?

The Untouchable Sacred Cows

With the Armory Grant, there are multiple sacred cows involved that I believe prevent public criticism of this grant, no matter on how many levels it is illegal. Instead, we must bow down and accept that these saints know best, even if it’s breaking the law, because to raise the slightest objection is to render oneself a persona non grata.

Bill Kaplan, the millionaire philanthropist, who offered to match the $500,000 grant and even offered to double it to $1 Million if the OC IDA would do the same (Mr. Petro deferred.) Mr. Kaplan is Newburgh’s most prolific benefactor, and while he is friendly and affable, who would want to provoke his wrath? I asked Mr. Kaplan why the Armory/OC IDA wouldn’t contact the State Comptroller Thomas DiNapoli’s Office for an opinion on this, but he said the IDA told him it was fine.
Deirdre Glenn, the executive director of the Newburgh Armory Unity Center, formerly executive director of Newburgh’s Habitat for Humanity. Ms. Glenn is another Newburgh legend. However, her saintly acts have not meant that she is incapable of making mistakes. For example, she pressured the city to give Leyland and Habitat a $300,000 loan at a time when banks refused to make such a loan. The city went ahead, despite dissension by Coucilwoman Mary Ann Dickinson, and a few years later, when the loan was heading toward default, the city ended up writing off $150,000 of the original loan. I do not believe Ms. Glenn or Mr. Kaplan have any particular interest in whether the OC IDA grant is legal or not, so long as they get the money.
Jim Gagliano, and, by association, the FBI. Mr. Gagliano was profiled in the New York Magazine love fest article, “Welcome to Newburgh, Murder Capital of New York,” from September 25, 2011. He is the supervisory FBI agent for the region, and also coaches basketball at the Armory on Saturday mornings. He showed up at a city council meeting when the contract with the Armory nonprofit was being considered, although he did not speak. With the local FBI head a blind supporter, who is going to trample on toes and quibble about the intrinsic nature of industrial development agencies promoting economic development?
The children. When in doubt, invoke the children. It happens all the time, and this case is no different.
The gang members. In the Orange County IDA attorney Philip Crotty’s letter to David Kidera, head of the ABO, in response to the ABO’s report mentioned above, Mr. Crotty writes that “[t]he Orange County IDA is doing its best to create jobs for our people young and old, whether they are gang members, community college graduates, four-year college graduates, or laid-off employees in need of a fresh start.” This is quite extraordinary.
The tourists. In the OC IDA’s correspondence and in statements made at meetings, a repeated justification for the grant is that it will generate “tourism” which will, in turn, presumably generate “economic development.” However, the numbers given at the July OC IDA meeting by Glenn and Kaplan seemed grandiose in terms of what the tourism/economic impact would be, and there was no justification for the numbers, and also no binding commitment to the IDA that these numbers would actually be met. This runs counter to initiatives and tightening of regulations both by Governor Andrew Cuomo and State Comptroller Thomas DiNapoli to ensure that expenses and projects run by IDAs actually deliver the benefits and impacts they say they will–or else.

Who’s doing the grilling?

The ABO has been thorougly informed of this situation but, to date, has taken no further action other than the report mentioned above. I have also been in touch with the State Comptroller’s office (with whom Mr. Petro, in conversation with me a month or two ago, would not give an answer as to why he would not just contact them directly.)

Perhaps there will be better luck with Attorney General Eric Schneiderman, from whose office I recently received an acknowledgment dated December 2 regarding my complaint.